Health Care Bill & its

Impact on Life Sciences

Cognizant May , 2010

Presented By:

All rights reserved. The information contained herein is subject to change without notice. ©2010, Cognizant Technology Solutions
 Overview

 Health Care Bill – Summary

 Its Impact on Life Sciences Industry

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 Patient Protection and Affordable Care Act
Coverage:
Would expand coverage to 32 million Americans who are currently uninsured.

Health Insurance Exchanges:

The uninsured and self-employed would be able to purchase insurance through state-
based exchanges with subsidies available to individuals and families with income between
the 133 percent and 400 percent of poverty level.
Separate exchanges would be created for small businesses to purchase coverage --
effective 2014.
Funding available to states to establish exchanges within one year of enactment and until
January 1, 2015.

Subsidies:
Individuals and families who make between 100 percent - 400 percent of the Federal
Poverty Level (FPL) and want to purchase their own health insurance on an exchange are
eligible for subsidies.
They cannot be eligible for Medicare, Medicaid and cannot be covered by an employer.
Eligible buyers receive premium credits and there is a cap for how much they have to
contribute to their premiums on a sliding scale.

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Health Plans and the Managed Care Sector
Individual Mandate:
 In 2014, everyone must purchase health insurance or face a $695 annual fine. There are
some exceptions for low-income people.
Employer Mandate:
 Technically, there is no employer mandate. Employers with more than 50 employees must
provide health insurance or pay a fine of $2000 per worker each year if any worker receives
federal subsidies to purchase health insurance. Fines applied to entire number of
employees minus some allowances.
Immigration:
 Illegal immigrants will not be allowed to buy health insurance in the exchanges -- even if
they pay completely with their own money.
Health Plans
 take on children with pre-existing conditions
 eliminates the ability to rescind coverage except in the most extreme circumstances
 prohibits caps on lifetime benefits
 allows young adults to stay on their parents' insurance coverage until their 27th birthday.
Paying for the Plan:
 Medicare Payroll tax on investment income -- Starting in 2012, the Medicare Payroll Tax will
be expanded to include unearned income. That will be a 3.8 percent tax on investment
income for families making more than $250,000 per year ($200,000 for individuals).
 Excise Tax -- Beginning in 2018, insurance companies will pay a 40 percent excise tax on
so-called "Cadillac" high-end insurance plans worth over $27,500 for families ($10,200 for
individuals). Dental and vision plans are exempt and will not be counted in the total cost of
a family's plan.
 Tanning Tax -- 10 percent excise tax on indoor tanning services.

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Health Plans & Managed Care Sector

Medicare:
 Closes the Medicare prescription drug "donut hole" by 2020. Seniors who hit the
donut hole by 2010 will receive a $250 rebate.
 Beginning in 2011, seniors in the gap will receive a 50 percent discount on brand
name drugs. The bill also includes $500 billion in Medicare cuts over the next
decade.
 The industry will have to provide 50 percent discounts beginning next year to
Medicare beneficiaries in the "doughnut hole" gap in pharmaceutical coverage,
but those price cuts plus gradually rising federal subsidies will mean more
elderly people will purchase more drugs

Medicaid:
 Expands Medicaid to include 133 percent of federal poverty level which is
$29,327 for a family of four.
 Requires states to expand Medicaid to include childless adults starting in 2014.
 Federal Government pays 100 percent of costs for covering newly eligible
individuals through 2016.
 Illegal immigrants are not eligible for Medicaid.

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Pharmaceuticals - Affect

 Huge New Market - $30 billion, 10-year net gain for the industry -
increase in revenue as more people will have insurance to pay for drug
coverage.
 Requires drug companies to contribute more than $80 billion toward the
cost of reform in the form of industry fees and a 50 percent discount to
Medicare beneficiaries for drugs purchased in what is known as the
"donut hole,"
 the Act bestows upon the high-growth biotechnology sector a new 12-
year window of protection from generic competition, providing additional
incentive for continued product development and investment in the
industry.

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Impact on IT – lot of data & lot of reports !!

 Increased volumes of data processing – Sales

 Changes on Reporting for – Medicaid & Medicare data
 Imposes new transparency requirements effective April 2013,
pharmaceuticals, biotechnology and medical device manufacturers
must report payments and other things of value, provided to certain
providers, including doctors, medical practices, and teaching hospitals.
 Increased transparency in price concessions offered to certain
pharmacy benefit managers. Pharmacy benefit managers will see
increased reporting requirements related to rebates and discounts
received from pharmaceutical companies as well as reporting regarding
the pharmacy benefit manager's generic dispensing rates and supply
chain pricing.

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Referred links
http://www.cbsnews.com/8301-503544_162-20000846-503544.html
http://www.pharmatimes.com/WorldNews/article.aspx?id=17588&src=EWorldNews
http://www.reuters.com/assets/print?aid=USTRE62P3H120100326
http://www.business-standard.com/india/news/us-healthcare-bill-gains-for-indian-pharma/389736/
http://reason.com/blog/2010/03/30/health-care-reform-endgame-old
http://en.wikipedia.org/wiki/Health_Care_and_Education_Reconciliation_Act_of_2010
http://www.thefreelibrary.com/The+Health+Care+Reform+Legislation+and+its+Impact+on+the+Health+Care...-a0222499621

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Thank You

All rights reserved. The information contained herein is subject to change without notice. ©2010, Cognizant Technology Solutions